Kansas City’s airport caught in vice as airlines squeeze service to boost profits

Kansas City’s biggest challenge when it comes to improving its air service apparently has little to do with the age or design of its airport, but how it’s doing under a strategic trend in the airline industry called “capacity discipline.”

That’s according to a report released last month by the Massachusetts Institute of Technology’s International Center for Air Transportation. The MIT report found that medium-size hub airports such as Kansas City International have suffered the most in terms of losing service as the airline industry has evolved over the past five years.

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“Medium-hub airports, which the FAA defines as airports that enplaned between .25 percent and 1 percent of the nation’s air traffic passengers in a given year, have felt the biggest brunt of changing airline network strategies,” the report found. “Scheduled domestic flights from these airports were cut by 26.2 percent from 2007 to 2012 — the largest decline among any airport category.”

KCI fared even worse than its medium-hub peers during that period, according to the MIT study, losing 30.2 percent of its flights and 24.6 percent of its seats. The national average for airports in that category was a 21.4 percent drop in seats.

The other medium-size hubs in our region are Omaha and St. Louis.

Omaha experienced an 18.6 percent drop in flights and a 14.1 percent cut in seats between 2007 and 2012, and St. Louis had a 27.2 percent cut in flights and 20.3 percent reduction in seats.

The authors of the study, Michael D. Wittman and William S. Swelbar, said airlines embraced the capacity discipline strategy in response to the recession and rising fuel costs a few years ago, and the trend is not likely to go away even as the economy recovers.

Rather than the previous model of operating as many flights as possible to gain market share, the mantra now is efficiency. That translates into fewer flights, smaller planes and reduced operating costs.

“This profitability-focused management strategy helped the airlines’ balance sheets. However, this pursuit of improved airline efficiency resulted in cutbacks in domestic service at many U.S. airports,” the report said.

So medium-size hubs have fared worse under the whip of capacity discipline, but the large hubs and smaller airports have not been as badly beaten.

When it comes to large hubs in our large region, Denver lost just 0.6 percent of its flights and 5.3 percent of its seats over the last five years, and Minneapolis-St. Paul had a 6.5 percent decline in flights and an 11.8 percent cut in seats.

The small-hub category, which included Oklahoma City, Tulsa, Des Moines and Wichita, also has done comparatively better. Des Moines lost 21.7 percent of its flights and 3.7 percent of its seats; Oklahoma City, 14.6 percent of its flights and 4.4 percent of its seats; Tulsa, 26.4 percent and 19.8 percent; and Wichita, 26 percent and 17.8 percent.

“Airlines have been consolidating service at the nation’s largest airports while cutting back on service to small- and medium-sized airports,” the report said.

And in another ominous indication for Kansas City, the report found that Southwest Airlines, our largest carrier here with more than 46 percent of the market, is beginning to behave more like its more traditional rivals as it embraces capacity discipline.

“While Southwest did not cut flights as severely as the network legacy carriers in smaller markets, the airline’s recent attempts at capacity discipline should be worrying to smaller airports — particularly medium-hubs — whose previous growth was fueled largely by new Southwest service,” the authors said.

And the latest report from KCI indicates the downward trend is continuing in 2013. April passenger arrivals and departures were down 4.1 percent, and for the year to date passenger activity was off 9.2 percent compared with the same period last year. The number of available seats also was down 1 percent from April 2012.